 Chapter is production analysis and we are going to study the production process. Production process, basically this production process it entails the transformation of all the inputs into the output and not only the transformation it also includes all the decisions related for this transformation that at which time which decision has to be taken, which input has to be purchased, in which quantity it has to be utilized. So all these decisions they will be included in the production process. Now if we look at this we have already told this that the first thing the firm decides that it has to maximize its output, it has to attain its output at the maximum level for which we say that it has to see how many given resources I have, how much maximum output I can produce and if that firm decides in its dual combination then they will see that with that level of output how to keep its cost minimum and which least cost combinations I have to utilize. Now here when we talk about firm has to decide then we have to see that any firm is not ready in its dual combination. It has to decide keeping in view certain future aspects, now if we talk about this then just in case if we take an example, a farmer has to decide with the weather that I have a field and now look at the technical aspect for that or what is the technical constraint that because he has to select with the given resources, now in those given resources with regard to that weather he will have some crops, he cannot grow in the poor and he cannot grow the crops of the poor season in Rabi. Similarly an industrial farmer who does not have to do his decision entrepreneur, so once when he has to settle an industry or firm then he has to decide that I have there is a piece of land, how I have to utilize, do I have to put a jean factory on it, do I have to put a cattle factory on it or do I have to put something else on it. So the decision time is a particular space of time in which he has to decide and after that his flexibility will end. So when we look at that entrepreneur who has to decide he has to take some short term decisions and he has to take decisions for long term or for long term. So here the production process it involves mainly if we say the two aspects mean the short run processes or the short term decisions and likewise we can say there are certain decision that are long run and we may extend this term at the very long run, likewise we can say there are certain medium range decisions but actually the short run, the long run or the medium run can be utilized for various time spans for various type of the firm analysis but actually it pertains not only to the time domain rather it is applicable only to that flexibility that is in the hand of the entrepreneur. Once the decision is taken now every decision cannot be changed. Now if we look at the short run we say that all the aspects that he has of variable resources, entrepreneur has the availability of resources but in the short run he will be likely to have change in either one or the two resources means he may have machinery available, he may want to change the number of labor or he may want to use it for 10 hours rather than 8 hours likewise but he may not be able to make long run decisions so in the short run only one or the two inputs that can be adjusted Now when we use the word adjusted it means the entrepreneur or the producer or the firm owner it has certain larger picture in his mind and that larger picture it is showing the long run process or the long run production process Now for the long run production process entrepreneur has the availability of decisions that he can shift all the resources, he can change them so wherever he was doing yesterday on that land he can change it after the next 10 years and put it in the industry and likewise so long run decisions they are larger in the broader aspect and the short run decisions they have to be adjusted accordingly keeping in view the long run objectives and sometimes these short run and the long run decisions they go side by side and it is not particular that the one will end and the other will start they may go along to each other to have the total aspect of the project Now if we look further in the production analysis when we talk about the production process we can say that there can be the various combinations of goods there can be various combinations of resources there can be various combinations of labour and now we can explain this in the form of a production table So that is a Goswara or an aspect in which we will add all the utilization of inputs with numbers that will be called production table Now if we look at this slide and skip to the next you can see that here it is one table in which our first column is showing that there are certain number of workers Now here the number of workers does not mean that in our production which we have shown in the second column with total output that only and only these workers they are utilizing every resource it means these workers they are the variable input and along with this there will be many other factors of production in which you can say that there will be land there can be various machinery and something other and along with that these workers will be in combination and the others we are taking as constant Now if we look at this then this production process tells us that first we have utilized one worker then the other one, then the third one, then the fourth one and along with that these changes are coming in our output and these actual changes are coming now this helps us out that we are utilizing these numbers to see what process we can make for the future we should know that either the firm either the firm is getting certain output maximization or the firm is standing on the stagnate of the output now to see this we have to see that our output is increasing by enhancing the workers so apparently if we are going from 4 to 25 then we feel that our output is increasing but if we look in detail then at the start we see that it was going and going increasing but the maximum level of the total physical product it was 32 and after that this further has declined so this is not necessary whenever we increase the workers then along with increasing the total output this must increase so this table is telling us that there can be possibility that with the increase in the input there can be certain possibility that the output is increasing and after a certain point it might be stagnate and after a certain point it might decrease and similarly we have the table of marginal product and average product which we will explain in the next modules the same points that we have if we explain in graphical shape then the number of workers if we are showing the variable on x axis and the output is on y axis then we see that while going to a point where the total production was increasing and increasing at the increasing rate and if we look at the point further then yes total production is again increasing but the rate of change in that it was not as much as the growth here and then there is one point where it has stagnated and again now this is the stage where input is increasing and you know that when the input is increasing then behind it there will be a certain cost so it means the cost is also increasing here but if we look from here then our output, total production is declining